Nonprofit organizations in the U.S. - statistics & facts

Tax Exemption

Through providing such services, nonprofit organizations are qualified for tax exempt status in the U.S., which enables them to avoid paying federal income tax on their revenue. This allows nonprofit entities to reinvest any revenues it generates back into the organization and towards driving the goals of the organization. In order to qualify for tax exempt status, nonprofits must meet certain requirements defined by the Internal Revenue Service (IRS). Such requirements include operating exclusively for charitable, religious, scientific or educational purposes, as well as ensuring that their revenue is not benefiting private parties or shareholders.

Once deemed qualified by the IRS, nonprofit organizations are then sorted into different 501(c) categories depending on the IRS tax exempt codes under which they are registered, depending on the services they provide and areas of focus. The vast majority of nonprofits in the U.S. fall under the 501(c)(3) code. Such organizations include charitable organizations, public charities, and private foundations. In 2022, the total number of charitable organizations in the U.S. reached almost 1.49 million, with annual expenses exceeding 2.46 trillion U.S dollars. There are significantly fewer advocacy and social welfare (501(c)(4) organizations, with about 75,000 registered in the U.S. in 2022.

Donor Relations and Funding

Nonprofit organizations use a variety of fundraising methods to secure donations and remain operable. Cultivating and maintaining donors is a priority for many nonprofits, which results in organizations regularly seeking ways in which to broaden their donor base. Private donations are instrumental for the functioning of many U.S. nonprofits. In 2023, Feeding America received the most private donations of any U.S. charity by a significant margin, with more than four billion dollars in private donations reported that year. The average single donation across all NGOs in the U.S. was 807 U.S. dollars in. Among the varying sectors, there were significant differences in average donations. For example, the higher education sector received the most money per donation, with an average of 1,631 U.S. dollars, whereas the average single donation for animal welfare organizations was 299 U.S. dollars.

Recently, NGOs have been shifting toward digital fundraising as a contemporary and accessible way to boost donor engagement and subsequent revenue. Online giving has been one area through which nonprofits have attempted to broaden their donor base. However, online donations still make up a relatively small percentage of total donations. In 2021, 16.8 percent of donations made to faith communities were made online, a larger percentage than any other subsector. Another way in which nonprofits in the U.S. are trying to promote themselves and boost donations is through social media. As of 2021, nearly all nonprofit organizations reported using Facebook to attract new donors and advertise their services. In addition to being used by around 95 percent of nonprofits, Instagram was also the fastest growing platform in terms of following for NGOs that year.

Employment

Although nonprofits employ millions of people across the country and contribute billions of dollars to the national economy. However, as with other industries in the U.S., the sector has struggled with staffing shortages in recent years. In 2024, nearly one-third of NGOs in the U.S. reported between five to 14 percent of their positions having yet to be filled. A number of the biggest challenges among nonprofits were related to staffing, with more than 36 percent naming limited staff capacity as their greatest obstacle. Furthermore, approximately 21 percent of NGOs in 2024 reported high staff turnover being their biggest challenge.

With staffing shortages being at the forefront of organizational agendas, nonprofits across the U.S. have been implementing an assortment of recruitment strategies in an attempt to attract new employees, and retain current employees. Due to their nature, nonprofit employees often receive lower wages than for-profit companies, and high rates of inflation may be forcing workers to seek employment elsewhere. Many nonprofit employees are motivated by not only their salaries, but also by the mission of their organizations. Nevertheless, competitive pay is an important part of employee recruitment and retention, even for nonprofits. In 2023 around 35 percent of organizations reported that increasing pay and benefits was one of the recruitment measures they were planning to introduce or had already implemented.

Diversity and Inclusion

Despite providing services to a diverse population, nonprofits in the U.S. are still lacking in terms of workplace diversity, with only 20 percent of NGOs in the U.S. having clear diversity, equity, and inclusion (DEI) policies in place before 2020. As of 2023, 58.4 percent of full-time nonprofit employees were white. There appears an even larger disparity in terms of nonprofit leadership, with 63 percent of nonprofits having an executive director, CEO, or managing director who was white, whereas around 14 percent reported being Black-led. This pattern extends to board members as well, with 64 percent of board members being white.

In addition to staffing, there was also disparity between sources of revenue for organizations led by Black, Indigenous, and people of color (BIPOC) in 2022. That year, BIPOC-led nonprofits in the U.S. received less funding from all sources. Around 58 percent of BIPOC-led NGOs received corporate donations, as opposed to 86 percent of white-led of white-led NGOs. Additionally, BIPOC-led organizations also received less funding from the government, on the local, state, and federal level.

Volunteering

Many nonprofit organizations in the U.S. rely heavily on volunteers to remain operable and to supplement staffing shortages. Between 2020 and 2021, the state of Utah had the highest volunteer rates in the country, with an estimated 40.7 percent of the population having formally volunteered with at least one organization that year. In 2021, the volunteer rate among Americans aged 16 to 17 was 28.2 percent, more than any other age group. The second highest rate by age group was among people between the ages of 45 and 54, with a rate of 27 percent that year. However, from a generational perspective, Generation X saw the highest rate in 2021, with 27.2 percent In the United States, the data appears to show a correlation between levels of education and a propensity to volunteer. Around 42.2 percent of graduate degree holders volunteered formally in the U.S. in 2021, which was twice the rate as those who attained some college.